Director FAQs and Essentials

Director Essentials: AI and Board Governance

By NACD and Data & Trust Alliance Staff


Artificial Intelligence Technology Oversight Strategy and Risk

Artificial intelligence (AI) is a transformational technology with the potential to produce both significant value and harm for businesses and their stakeholders. With advances occurring rapidly amid widespread attention, it can be difficult for a company to cut through the hype to understand whether and how this technology can positively impact its business.

However, most companies are likely already using some forms of AI in their operations through tools the organization has acquired or developed, or from services provided by suppliers.

AI poses unique opportunities and risks, both of which implicate boards’ fiduciary responsibilities. Boards can continue to draw on the suite of governance principles, IT governance frameworks, practices, and experiences honed through their oversight of cybersecurity, privacy, ethics and compliance, and emerging technology to meet the challenges of AI governance.

On the other hand, artificial intelligence does require the board to shift its perspective, its engagement with management, and some of its practices. This publication outlines foundational AI knowledge, presents key board focus areas, and describes how the board can adapt to provide effective oversight. Boards will likely need to update committee responsibilities, increase AI-specific education, and engage more frequently and in greater depth with management in its evaluation of AI.

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